IMF to revise global economic growth upward on faster post covid-19 recovery

 

The global economy is on an unexpected rebound after easing of Covid-19 lockdown measures, forcing the International Monetary Fund (IMF) to review its negative opinion.

Speaking at the quarterly release of the World Economic Outlook on Tuesday night, IMF chief Kristalina Georgieva said the lender will revise this year’s global economic forecast after it strengthened more than expected since June.

“The picture today is less dire. The economy is rebounding from the depth of this crisis,'' Georgieva said at the London School of Economics.

She however warned that the pandemic is far from over.

The IMF predicted in June that the gross domestic product, a measure of all goods and services produced during a fixed period, would contract by 4.9 per cent , the sharpest since the Great Depression in the 1930's.

The global lender did not disclose revised forecast numbers, only saying that developments in the second and third quarters were somewhat better than expected, hence a small upward revision to global forecast for 2020.

It intends to publish the forecast at next week’s annual meeting.

The IMF's positive opinion is coming days after Kenya's Treasury CS Ukur Yatani said the country's economy was growing faster than expected after easing of lockdown measures in July.

He said the economy was growing at 2.5 per cent, the best in the continent.

The country's statistics Kenya National Bureau of Statistics (KNBS) had in July predicted less than a percentage growth.

IMF on other hand had in June predicted a negative one per cent growth for Kenya, citing Covid-19 economic shocks.

Kenya’s private sector performance in September also touched a 30-month high, exhibiting unexpected resilience despite the  effects of Covid-19.

The Performing Managers Index (PMI) hit 56.3 points, the highest reading since April 2018, indicating a sharp improvement in the performance of private sector in monthly data released by Stanbic Bank.

The upturn is attributed to the government’s decision to relax Covid-19 restrictions.

IMF said $12 trillion in financial aid and unprecedented levels of monetary easing have helped many advanced economies, including the U.S. and those in the Eurozone, avoid the worst damage and begin to recover.

It added that China has also rebounded faster than expected but that other emerging market and low-income countries continue to grapple with weak health systems, excessive external debt and a dependency on sectors such as tourism that have been especially hard-hit by the coronavirus pandemic.

Early this week, it extended debt restructuring for poor countries for another six months, asking economies to invest one per cent of their GDP in public to stimulate faster economic recovery.